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| The Holiday's Over |
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Europe's workers have had a sweet deal for decades. But the slump, red tape and a falling birthrate are changing that. Time to face reality |
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By PETER GUMBEL| Paris |
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Posted Sunday, June 1, 2003; 14.38BST
All around her, Caroline Blet can see signs of the slump that has beset the once-flourishing town of Ris-Orangis (pop. 25,000), 15 miles south of Paris, for more than two years. Things went from bad to worse in March, when the big LU cookie factory closed, taking 412 jobs with it. Shopkeepers complain of declining sales, and on May 25, five buses carried protesters from the town hall to antigovernment demonstrations in the capital. Blet, 41, runs a small real-estate agency that has so far escaped the downturn, as falling interest rates continue to boost house sales. But she has no illusions about her longer-term future. "My parents' generation was very lucky. They bought property cheaply before inflation came, they benefited from huge advances in health care and they retired at 60," she says. "I know I won't be able to retire at 60: I'll have to work two, three or four years longer."
That sentiment is echoing throughout Europe: the holiday is over. During the past quarter-century, workers have grown used to ever-rising wages and ever-shorter working lives. They enjoy long vacations and reduced workweeks, and retire well before 65; the French strikers last month were marching to protect full-paid retirement in some positions at the not-so-ripe-or-old age of 52. European countries were proud to provide free education and health care and generous pensions. Those benefits were affordable as long as a buoyant economy made up for the costs. Governments have whittled away at them, but now the one-two punch of a shrinking population and dwindling productivity means the perks are no longer sustainable — and makes an imperative of deep reform.
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I know I won't be able to retire at 60: I'll have to work two, three or four years longer
— CAROLINE BLET, French real-estate agent |
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Yes, a recovery will come, and it's greatly anticipated: in last week's TIME/CNN poll, economic growth tied with the war on terrorism as Europeans' No.1 priority. But if the past is any guide, the next upturn will be weak. The average per-capita economic growth in the E.U. dropped steadily from 2.6% annually in the 1970s to 2.1% in the 1980s and just 1.7% in the 1990s. The falloff will likely be even steeper over the next decades. Women in the E.U. are having on average 1.5 babies, well below the 2.1 required to keep the population stable. At the same time, the proportion of people over 65 is rising sharply. If these trends continue and policy is left unchanged, the E.U.'s working-age population will drop by about 40 million by 2050.
All that will widen an already yawning gulf between Europe and the U.S., where long-term growth has remained constant and birthrates high, thus replenishing the workforce. U.S. workers on average spend 475 hours more on the job per year than they do in the Netherlands. But now the economic decline is forcing governments in France, Germany, Italy and elsewhere to become more — gasp! — American in their approach to labor policy.
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